Rand’s volatility requires new year’s resolution
Currency’s instability shows no sign of abating
After a roller-coaster year for the rand, volatility in local markets shows no sign of abating. Analysts, however, are somewhat optimistic that this alone will not prompt further interest-rate increases for now, given signs that the risk of high inflation is easing. Those applauding the Reserve Bank’s decision to raise interest rates in November — a period of relative calm — were correct in thinking the wild swings in the value of the rand would continue. The rand’s implied volatility — based on the willingness of traders to buy and sell the currency — remains elevated by domestic and international risk factors, including domestic policy uncertainty and tepid economic growth. According to Bloomberg’s Implied One Month Rand Volatility Index, implied volatility was at 16.54% on Wednesday, well off its 2018 high of 22.81% in September. But the rand remains as volatile as it was ahead of the ANC elective conference in December 2017. Various international factors have emerged to drive vo...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.